Model Compensation Plans
Source: CPA Practice Management Forum
This article is by August Aquila, co-author of the best-selling Compensation as a Strategic Asset: The New Paradigm (AICPA, May 2007). Reach him at [email protected].
Following are some important ideas from the article:Partner Compensation:
- The most important partner roles include:
- Leading as opposed to administering.
- Developing business.
- Managing the book of business.
- Working on clients.
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50 percent 20 percent 20 percent 5 to 10 percent 5 percent |
Firm leaders and the managing partner should have a major allocation related to performance of their departments or, in the case of the managing partner, the firm as a whole. Typically 25 percent of their compensation may be related to performance of their areas.
Staff Compensation:Here is an example of how to weight a staff member’s most important functions:
- Personal competencies include problem solving, relating to diverse groups, leading, communicating, project management, and using technology. Functional competencies include decisions, risk evaluation, research, developing new business, and working on and maintaining new business. This area might be allocated up to 45 percent of total compensation.
- Productivity (meeting personal goals) would merit another 45 percent.
- Bonus (discretionary) might be five to 10 percent of the total.
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